“There are decades where nothing happens; and there are weeks where decades happen”
Vladimir Ilyich Lenin
The Covid pandemic triggered a seismic shock in the form of lockdowns and unprecedented money printing. Now, the Ukraine war is creating another crisis that can’t be solved by just printing more money. The supply of food and energy commodities is suddenly more constrained than it has ever been in recent history.
To illustrate how difficult it is to navigate this uncertain world, just look at the performance of two currencies against the US Dollar: The Japanese Yen and the Russian Ruble. The former has traditionally been associated with a risk-off asset, meaning that it would usually strengthen in times of high volatility, while the latter has been hit by the harshest sanctions deployed by the West since World War II. Yet, the Yen is down 12% while the Ruble is up 3% since the beginning of the year.
The Euro is also in trouble. It is now at a 5-year low against the US Dollar. Europe is paying the price for the sanctions imposed on Russia as high energy costs are hitting it hard. Luke Gromen summarizes what the market may be pricing for the Euro. In short: More money printing is coming to Europe.
The losses in the bond market since the beginning of the year are already considerable and unprecedented: $6 trillion (more than twice the GDP of France).
This week there were particularly good podcast episodes to explain what is unfolding in financial markets and how to navigate these troubled times.
Bankless | The Stagflation Mega-Trade | Dan Morehead
Dan Morehead is the Founder & CEO of Pantera Capital, a blockchain investment firm that’s up nearly 65,900% since inception (yes, a 658x return). He has spent decades managing global macro funds throughout many cycles. In this interview, he provides his analysis of how we got here, what is likely to happen going forward and how he is positioning his fund in this environment.
On the Margin | Is the Bull Market Over? | Darius Dale
In this episode, the founder and CEO of 42 Macro (a macro research platform), Darius Dale, gives details on his four horsemen of market risk signals and what they tell us about potential hazards brewing in the market. Darius walks us through his point of view on the Fed’s inflation fears, the Bank of Japan’s reinstatement of yield curve control, and warning signs coming out of China.
Hidden Forces | How to Position & Prepare Yourself for the End Game | Grant Williams
In this 50-minute episode, Grant Williams explains how the reaction of the West to the invasion of Ukraine by Russia has resulted in a geopolitical paradigm change. He goes on to discuss his views on what these changes mean for the future of democracy, civil society, and capitalism.
MacroVoices | #321 The Commodity Supercycle Has Begun | Ole Hansen
If you want an in-depth discussion on commodities only, this episode is for you. Ole Hansen from Saxo Bank (also co-host of the daily Saxo Market Call podcast) covers all commodities from energy to food to precious metals. The interview starts at 16:00.
Crypto Corner
This week was a busy week for crypto.
First, Fidelity announced it will soon allow its clients to add Bitcoin to their retirement accounts. Fidelity has $4.2 trillion of assets under management.
Second, Panama just passed a law that creates a crypto-friendly framework and removes capital gains tax from crypto transactions.
Finally, following in the footsteps of El Salvador, which made Bitcoin legal tender last year, the Central African Republic just made Bitcoin legal tender.
Empire | Empire Bull Case for ETH 2.0 Merge | Travis Kling
If you are looking for a bullish investor on crypto in the current macroeconomic environment, Travis Kling is your guy. He is the founder of Ikigai Asset Management. In this episode, Travis discusses the implications of the ETH 2.0 merge, why ETH is prime for institutional capital, what a macro bear market means for crypto and Ikigai's investment strategy.
My usual tip to keep up with all the podcasts: Listen to them at 1.5 - 1.75x speed!